1
Question
Old Ratio - New Ratio = _______.
Old Ratio - New Ratio = _______.
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Solution
The correct option is C Sacrificing ratio
When a new partner is admitted he is given an agreed share in profits this share is only given due to sacrifice made by the old partners from their existing profit sharing ratio hence The ration in which the partners have agreed to sacrifice their share in profit in favour of other partner is known as sacrificing ratio.
The difference between old ratio and new ratio is the sacrifice ratio.
For example:
Old profit sharing ratio is 3:2:1 among A,B and CNew profit sharing ratio is 1:2:3 among A,B and CSacrificing ratio = Old ratio-New ratioGaining ratio= New ratio-Old ratioA sacrifices=3/6-1/6 = 2/6
B sacrifices=2/6-2/6= No changeC gaining=1/6-3/6=2/6.
When a new partner is admitted he is given an agreed share in profits this share is only given due to sacrifice made by the old partners from their existing profit sharing ratio hence
The ration in which the partners have agreed to sacrifice their share in profit in favour of other partner is known as sacrificing ratio.
The difference between old ratio and new ratio is the sacrifice ratio.
For example:
Old profit sharing ratio is 3:2:1 among A,B and C
New profit sharing ratio is 1:2:3 among A,B and C
Sacrificing ratio = Old ratio-New ratio
Gaining ratio= New ratio-Old ratio
A sacrifices=3/6-1/6 = 2/6
B sacrifices=2/6-2/6= No change
C gaining=1/6-3/6=2/6.
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